Achieving Positive Outcomes In A Tough Market
Branding is one of those activities that seems easy to reduce, right? Wrong!
There’s been a lot of commentary of late regarding business investment in a recession. Available research data outlines compelling reasons to continue to invest your brand. Failure to do so will result in your company falling behind in the immediate term and be slow to rebound when the market turns.
Profit Impact of Marketing Strategy (PIMS) is arguably the most robust database that has been used to study the impact of marketing during recession on profitability. By examining company’s performances versus business investment during periods of recession and recovery, the lessons learned are clear.
- Those companies who cut marketing tended to have better profitability during the recession. No surprises here as the savings went straight to the bottom line.
- However, during the recovery phase the companies that increased marketing spending came out winners in terms of profitability and market share.
- The PIMS study proves conclusively that increasing marketing investment during the recession will yield long-term profitability and market share – two key indicators of brand building.
Other studies reinforce the PIMS message.
- McGraw Hill found that B2B companies that maintained or increased their marketing spend during the 1981-82 recession grew during and after the recession at a far greater rate than those who didn’t maintain or increase marketing spending.
- According to PWC, marketing during a time of economic difficulty solidifies your client base, portrays you as stable, takes business away from less aggressive competitors and positions your company well for post recession growth.
Knee jerk reactions to demands for cutting business investment indicate a lack of strategic outlook. Of course cost-cutting measures provided careful analysis has been undertaken is necessary to keep operating costs in check with demand. But, right now, all too many decision makers view marketing (and investing in staff development) as the easy cost-cutting option. These companies will inevitability learn from their mistakes – customers and employees will vote with their feet, which will impact profitability.
Look no further than Bunnings as a perfect example of reaping the benefits of investing in your brand during tough and good times. Not only is the Bunnings brand is well defined (based on price, range and service attributes), its brand is indistinguishable from its business model. The Bunnings do-it-yourself offering makes it somewhat recessionary proof, but its attitude toward continual investment in the business in areas such store expansion, technology, staff development and marketing has allowed it to drive a wedge between itself and the competition. Its ‘glass is half-full’ mentality ensures that there are opportunities to be taken advantage of whilst competitors scramble to compete and look to cutting costs during tough times. No wonder why Bunnings is widely regarded as the jewel in the Wesfarmers crown and deservedly so.
A tick of approval must go to the CEO of The Body Australia, Penny Caldow. The company recently assured its 1200 staff and 2500 consultants there will be no layoffs in light of the economic downturn. Reflecting the importance of standing by your people, it’s a pity other CEOs are unable to follow suit.
Brand must be seen as a ‘whole of business’ concern. All of the companies we work with view their brands as central to their business. It is clearly defined and consistently delivered on.
Here are simple tips to differentiate your brand from that of your competitors in the current economic climate, invest in the following:
- Vigilantly focus on customer needs – in a changing economy, a customer’s basic needs don’t disappear, but priorities can shift and you need to look for creative and innovative ways to satisfy those needs. It is more important than ever to know what is going on in the lives of your important customers and how you can better assist their business.
- Reinforce your brand at every interaction – it’s important to remember that in a risk-adverse climate customers cling even stronger to the brand in which they are most familiar. Your brand attributes are a framework for your business decisions and interactions with our customers. Remind customers of why they should choose your brand at every interaction and opportunity.
- Communicate frequently – the pace of decision making can pick up when the economy slows so get information to your teams and customers as quickly as possible.
- Look for more ways to deliver best value to our customers – think outside the square, work smarter with reduced budgets and look for new ways to provide more value for less expense.
So what are you waiting for… start investing today!